Leasing vs. Buying Your Torque Machine
With the pressure of cost efficiencies on the industry continuing, leasing of equipment is becoming more and more popular.
With customers across the globe becoming more used to paying for things on a month-by-month basis, many want to apply the same method to their equipment.
But is leasing really the best way to invest money into your torque machine, or is purchasing one a better option for your business?
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Pros Vs Cons
Leasing: The Benefits
Leasing keeps your equipment from becoming obsolete. With a lease, you don’t own a depreciating asset. After the lease expires, you are free to lease whatever equipment is newer, faster and cheaper.
Leasing offers a predictable monthly expenditure, this can help you budget more effectively
Leasing can enable your business to acquire new technology that might be otherwise unaffordable. This enables smaller companies to keep up with larger competitors without draining their financial resources.
Leasing: The Downside
It can work out to be more expensive than if you buy the assets outright, especially if you lease long term.
Your business can be locked into inflexible medium or long-term agreements, which may be difficult to terminate.
Depending on the lease terms, you may have to make payments for the entire lease period, even if you no longer need the equipment, which can happen if the business environment changes.
Buying: The Benefits
Buying equipment is easer than leasing - you decide what you need, then go out and buy it. Taking out a lease, usually involves at least some paperwork that can require lots of details.
Your equipment is tax deductible. Normally you can deduct the full cost of newly purchased assets in the first year. With most leases, you can only deduct the monthly payment.
Buying new equipment can be viewed as an investment into the company. Not just in the current performance of your business but ultimately, in its future.
Buying: The Downsides
You must pay the full cost of the asset up front which can affect your cash flow. Those funds could be used elsewhere for further promotions and helping you grow your business.
You are entirely responsible for the maintenance and repair of the asset, which can be a risk if the equipment breaks down or needs replacing.
With newer technologies being invented constantly, the value of the asset may depreciate over time and you may be stuck with out-dated equipment.